GM to Build Small Car in U.S.

General Motors announced this morning that it will build a new, fuel-efficient small car in the United States in the next few years, bucking a longtime industry trend to manufacture such vehicles overseas.

Most of the small cars sold in the U.S. are built overseas, partly because the vehicles' prices are too low to adequately cover domestic production costs. The new plant --the location of which was not disclosed -- will produce cars that are smaller than the Chevrolet Cobalt or the Honda Civic.

United Auto Workers officials have acknowledged that "innovative" labor agreements will be necessary to build small and compact cars in the U.S.

The plant would increase the proportion of GM vehicles built in the United States, partially alleviating union complaints that GM's survival plan called for production jumps in South Korea, China and Mexico.

Company officials said the decision to build a small car in the United States reflects a new labor agreement and what company officials see as a growing American demand for fuel-efficient cars.

"Small cars represent one of the fastest growing segments in both the U.S. and around the world," GM chief executive Fritz Henderson said in a statement. "We believe this car will be a winner with our current and future customers in the U.S."

The revamped plant will be capable of building 160,000 cars annually and will employ 1,200 people.